1. Strategies, Policies, and Planning Premises
MANAGEMENT: A GLOBAL AND ENTREPRENEURIAL PERSPECTIVE by Weihrich, Cannice, and Koontz
Chapter 5
Strategies, Policies, and Planning Premises
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

2. KEY IDEAS AND CONCEPTS FOR REVIEW
Strategy
Policy
Tactics
Key elements in the strategic planning process
TOWS Matrix by Weihrich
TOWS Merger Matrix
Blue ocean strategy
Portfolio matrix by the Boston Consulting Group
Major kinds of strategies
Hierarchy of strategies
Porter’s generic strategies
Planning premises
Environmental forecasting
Delphi technique
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

3. After studying this chapter, you should understand:
The mission, strategies, and policies.
The strategic planning process.
The TOWS Matrix and the business portfolio matrix.
Some major kinds of strategies/policies and the hierarchy of strategies.
Porter's generic strategies.
The nature of premises and forecasts.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

4. Definition of Strategy and Policies
Strategy is the determination of the mission (or the fundamental purpose) and the basic long-term objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary to achieve these aims.
Policies are general statements or understandings that guide managers' thinking in decision making.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

5. Fig. 5-1 The Strategic Planning Process
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

6. The Strategic Planning Process (Figure 5-1)
Inputs to the organization
Industry analysis
Enterprise profile
Orientation, values, and vision
Mission (purpose), major objectives, and strategic intent
Present and future external environment
Internal environment
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

7. The Strategic Planning Process – cont.
Development of alternative strategies
Evaluation and choice of strategies
Medium- and short-range planning
Implementation through reengineering, staffing, leadership, and control
Consistency testing and contingency planning
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

8. Mission, Objectives, and Strategic Intent
Mission relates to the kind of business.
Objectives are the end points for activities.
Strategic intent is the commitment to win in the competitive environment.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

9. Definition of the TOWS Matrix
The TOWS Matrix is a conceptual framework for a systematic analysis that facilitates matching the external threats and opportunities with the internal weaknesses and strengths of the organization.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

10. Fig. 5-2 TOWS Matrix for Strategy Formulation
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

11. TOWS Matrix: 4 Alternative Strategies
SO strategy: Maxi–Maxi
WO strategy: Mini–Maxi
ST strategy: Maxi–Mini
WT strategy: Mini–Mini
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

12. Fig. 5-3 Dynamics of the TOWS Matrix
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

13. Chapter 5. Strategies, Policies, and Planning Premises
Application of the TOWS Matrix for Mergers, Acquisitions, Joint Ventures, and Alliances
Develop a TOWS Matrix for both companies before the merger, etc.
Develop a TOWS Matrix of the joint company after the merger, etc.
See Illustration of DaimlerChrysler merger in the closing section of Part 2
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

14. Blue Ocean Strategy by Kim & Mauborgne and TOWS Matrix by Weihrich
Explore opportunities in uncontested markets (Opportunities in the TOWS Matrix) Example: Southwest Airline
Be aware of competition in red ocean markets (bloody competition). Example, today’s personal computers
Value innovation: total company commitment to create value for the customer
Blue ocean strategy and the TOWS Matrix (SO or WO strategies in uncontested markets)
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

15. Fig. 5-4 Business Portfolio Matrix
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

16. Business Portfolio Matrix
Two dimensions
Relative competitive position (market share)
Business growth rate
Four positions
Question marks
Stars
Cash cows
Dogs
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

17. Major Kinds of Strategies and Policies
Products or Services
What are some of the key questions to ask?
Marketing
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

18. Hierarchy of Company Strategies
The corporate-level strategy. Executives craft the overall strategy for a diversified company.
Business strategies are developed usually by the general manager of a business unit.
Functional strategies. The aim is to support the business and corporate strategies.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

19. Five Forces in Industry Analysis (Porter)
The competition among companies
The threat of new companies entering the market
The possibility of using substitute products or services
The bargaining power of suppliers
The bargaining power of the buyers or customers
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

20. Porter’s Generic Strategies
Overall Cost Leadership Strategy
Differentiation Strategy
Focused Strategy (low cost or differentiation)
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises

21. Premising and Forecasting
Planning premises are the anticipated environments in which plans are expected to operate.
Environmental Forecasting
Values and areas of forecasting
Forecasting with the Delphi technique
What are the typical steps of the technique?
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises